Why don't people cheer the brilliant elements of No-Deal crash- Such as making property affordable?

margaretx9

andrewf75 wrote: »

How could anyone possibly get anything so wrong...

If you want to upsize then a fall in prices helps you.

Say you buy a flat for £200k with a £100k mortgage and prices double. So your flat is worth £400k. But that £300k house you want to buy as you are going to have kids is now £600k. So while in theory you are £200k better off you actually have to find another £100k to buy the house you really want and need - so you are in effect £100k worse off.

Say prices had fallen by 20% instead. Yes your £200k flat would now be worth £160k but that house would cost only £240k. So you only need to increase your mortgage by £80k to buy it.

Obviously such scenarios might have impacts more generally – but for first time buyers and upsizers price falls are helpful. For downsizers and buy to let landlords it works the other way.

Its of course amazing that so many people who bought in the mid to late 1990s were only able to do so at such cheap prices precisely because of the crash which happened earlier that decade. Now of course many of the same claim falls would be the end of civilisation. The hypocrisy is a bit much!

And for most people who owned homes from 1989 to 1997 - they paid their mortgages and life went on! Only those who took out more debt than they could manage suffered - back in those days of course we rewarded the prudent and not the imprudent. How times change.

Herzlos

That works if and only if you can still afford to extend your mortgage by the £160k, and in a recession/slump that's sufficient to knock 20% off house prices it's probably harder to extend a mortgage by £160k than it'd be to extend by £200k when times are good. Potentially the lending criteria will be a lot harder (more risk of defaulting), or the interest rate will be higher (more risk of losing money on a default).


The situation is a lot worse for new buyers with a 10% deposit, than an upsizer with a 66% deposit. If the properties were still affordable then the prices wouldn't drop.


Would you rather take a £200k mortgage at 3%, or a £160k mortgage at 6%?

margaretx9

Herzlos wrote: »

That works if and only if you can still afford to extend your mortgage by the £160k, and in a recession/slump that's sufficient to knock 20% off house prices it's probably harder to extend a mortgage by £160k than it'd be to extend by £200k when times are good. Potentially the lending criteria will be a lot harder (more risk of defaulting), or the interest rate will be higher (more risk of losing money on a default).


Would you rather take a £200k mortgage at 3%, or a £160k mortgage at 4%?

I would rather a £160k mortgage at 4% - as over 25 years I would pay £30,000 less in mortgage payments and £140 less a month!

Never mind the monthly payments - feel the debt.

In London a 50% fall in house prices would take levels back in most of the capital to where they were merely in 2012. How did such an impoverished nation with such low prices host the world's greatest sporting event a mere 6 years ago?!

Herzlos

Oh yeah, I was only counting the interest - the £200k @ 3% has about £9k less in interest, whoops. The £160k needs to go up to 5.5% apr to be more expensive.

GreatApe

All house price crash cheerleaders are losers because they simple dont know two simple facts

#1: 99% of owners in any given year are owners in the year after. Or another way to put it is that first time buyers only ever buy 1% of the housing stock in any given year so any crash is unlikely to help many buyers at all

#2: If a house price crash happened it isnt going to solve many/any of your life problems.
If a £200k house loses 20% of its value you just save a whopping £6 per day on your mortgage.
Fantastic. You can now afford to buy a big mac your life is so much better now with your £6 a day extra spending power. You just won life and all it took was 10 years debating 20 hours a day on when and how this house price crash was going to change your life so much with £6 a day in additional income. There was clearly no other way to spend 20 hours a day for 10 years doing anything else which would bring you £6 a day or more in any other way so time spent well !!!

So I repeat, waiting for a hpc is a fools game. Even if it happens your life will change no more than being able to afford another big mac burger. Don't wait for a big mac if you really want to better yourself go better yourself in one of the hundred other ways that will benefit you a hell of a lot more than £6 a day will

Wish someone had told me this when I was on that stupid website fortunately I managed to escape of my own accord

GreatApe

margaretx9 wrote: »

If you want to upsize then a fall in prices helps you.

Say you buy a flat for £200k with a £100k mortgage and prices double. So your flat is worth £400k. But that £300k house you want to buy as you are going to have kids is now £600k. So while in theory you are £200k better off you actually have to find another £100k to buy the house you really want and need - so you are in effect £100k worse off.

Say prices had fallen by 20% instead. Yes your £200k flat would now be worth £160k but that house would cost only £240k. So you only need to increase your mortgage by £80k to buy it.

Obviously such scenarios might have impacts more generally – but for first time buyers and upsizers price falls are helpful. For downsizers and buy to let landlords it works the other way.

Its of course amazing that so many people who bought in the mid to late 1990s were only able to do so at such cheap prices precisely because of the crash which happened earlier that decade. Now of course many of the same claim falls would be the end of civilisation. The hypocrisy is a bit much!

And for most people who owned homes from 1989 to 1997 - they paid their mortgages and life went on! Only those who took out more debt than they could manage suffered - back in those days of course we rewarded the prudent and not the imprudent. How times change.

no.....

housing in the UK is super affordable it always has been. Why do you think the crash cheerleaders are so angry? they are angry cos the 'sheep' have gotten free housing while they didn't

Which housing market is more affordable?
One that continuously goes up or one that continuously goes down?

Well we have two such markets.
Cars continuously go down and houses more or less continuously go up.

How much have you spent on cars?
My guess is a lot over the years while houses have cost you nowt or cost you a negative figure (ie increased your net wealth)

andrewf75

margaretx9 wrote: »

If you want to upsize then a fall in prices helps you.

Say you buy a flat for £200k with a £100k mortgage and prices double. So your flat is worth £400k. But that £300k house you want to buy as you are going to have kids is now £600k. So while in theory you are £200k better off you actually have to find another £100k to buy the house you really want and need - so you are in effect £100k worse off.

Say prices had fallen by 20% instead. Yes your £200k flat would now be worth £160k but that house would cost only £240k. So you only need to increase your mortgage by £80k to buy it.

Obviously such scenarios might have impacts more generally – but for first time buyers and upsizers price falls are helpful. For downsizers and buy to let landlords it works the other way.

Its of course amazing that so many people who bought in the mid to late 1990s were only able to do so at such cheap prices precisely because of the crash which happened earlier that decade. Now of course many of the same claim falls would be the end of civilisation. The hypocrisy is a bit much!

And for most people who owned homes from 1989 to 1997 - they paid their mortgages and life went on! Only those who took out more debt than they could manage suffered - back in those days of course we rewarded the prudent and not the imprudent. How times change.

Agree, but my comment to the previous poster still stands!

MobileSaver

margaretx9 wrote: »

but for first time buyers and upsizers price falls are helpful.

The flaw in your conclusion is that it is only true for cash buyers and most buyers (particularly first time buyers) cannot buy outright and need to borrow money to buy a house.

The problem with a falling market is that lenders are more risk averse and so tighten their lending criteria which makes it harder to buy a home even if the price is cheaper!

On top of which, as you yourself mentioned, there will be other general impacts as it is extremely unlikely a 20% drop in house prices would happen in complete isolation to other financial woes; for example, cheaper house prices on Rightmove are not much good if you have just lost your job...

movilogo

The problem with a falling market is that lenders are more risk averse and so tighten their lending criteria which makes it harder to buy a home even if the price is cheaper!

Not necessarily. The lenders also need to earn money, which they do by lending people money on which they pay interest.

So they will continue to lend to people with good credit rating. To mitigate their risk, they would value houses lower than sellers' asking prices. That would not be a bad thing.

leitmotif

GreatApe wrote: »

All house price crash cheerleaders are losers because they simple dont know two simple facts

#1: 99% of owners in any given year are owners in the year after. Or another way to put it is that first time buyers only ever buy 1% of the housing stock in any given year so any crash is unlikely to help many buyers at all

#2: If a house price crash happened it isnt going to solve many/any of your life problems.
If a £200k house loses 20% of its value you just save a whopping £6 per day on your mortgage.
Fantastic. You can now afford to buy a big mac your life is so much better now with your £6 a day extra spending power. You just won life and all it took was 10 years debating 20 hours a day on when and how this house price crash was going to change your life so much with £6 a day in additional income. There was clearly no other way to spend 20 hours a day for 10 years doing anything else which would bring you £6 a day or more in any other way so time spent well !!!

So I repeat, waiting for a hpc is a fools game. Even if it happens your life will change no more than being able to afford another big mac burger. Don't wait for a big mac if you really want to better yourself go better yourself in one of the hundred other ways that will benefit you a hell of a lot more than £6 a day will

Wish someone had told me this when I was on that stupid website fortunately I managed to escape of my own accord

I assume next time your boss awards you a 5% pay rise you'll spit in his face and tell him it amounts to less than 0.02% extra per day.

£200K won't buy even an average house in the UK (the average price is closer to £230K), so we would expect people buying a £200K house to be on less than average wages. To them, a £40K saving is a considerable amount of money. Hopefully they won't be fooled by the ad absurdum approach. Break it down even further if you like: it's only 25p an hour saved! But while you're at it, do consider giving £500K to an orphan charity. It might seem a lot, but if you're going to live for another 30 years, it works out at the equivalent of 3p a minute. You'd be an absolute miser not to!